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German lawmakers back Greek bailout talks after Merkel's chaos warning

Fri, Jul 17, 2015 - 8:33 PM

German lawmakers gave their go ahead on Friday for the eurozone to negotiate a third bailout for Greece, heeding a warning from Chancellor Angela Merkel that the alternative to a deal with Athens was chaos.

PHOTO: AFP

[BERLIN] German lawmakers gave their go ahead on Friday for the eurozone to negotiate a third bailout for Greece, heeding a warning from Chancellor Angela Merkel that the alternative to a deal with Athens was chaos.

The Bundestag lower house of parliament, whose backing is essential for the talks to start, decisively approved the move by 439 votes to 119, with 40 abstentions.

Popular misgivings run deep in Germany, the euro zone country which has already contributed most to Greece's two bailouts since 2010, about funnelling yet more aid to Athens.

Finance Minister Wolfgang Schaeuble has questioned whether a new programme will succeed, although the creditors' offer to Athens includes the conditions for more austerity and economic reform that Berlin had demanded.

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But Ms Merkel argued for negotiating a new deal to prevent a Greek exit from the euro - the "Grexit" that might undermine the entire currency union - and said suggestions Athens might temporarily leave the euro wouldn't work. "The alternative to this agreement would not be a 'time-out'from the euro ... but rather predictable chaos," she told the Bundestag.

"We would be grossly negligent, and act irresponsibly, if we didn't at least attempt this way."

Mr Schaeuble himself has suggested that Greece might be better off taking such a time-out from the eurozone to sort out its daunting economic problems.

But the conservative chancellor said neither Greece nor the other 18 eurozone member countries were willing to accept the idea. "Therefore this way was not viable," she added.

She still thanked Mr Schaeuble - her most powerful ally - for his work in the long, gruelling talks which produced the new bailout plan last weekend. Lawmakers gave him resounding applause while Mr Schaeuble nodded and gave a wry smile.

Despite his misgivings, Mr Schaeuble lined up with his boss. "I ask you all to vote for this request today. The government didn't submit the request easily," he told the Bundestag. "It's a last attempt to fulfil this extraordinarily difficult task."

Ms Merkel also won support from the Social Democrats, the junior coalition partner. "Every debate about a Grexit must now belong to the past," said Social Democrat leader Sigmar Gabriel, who is also vice chancellor.

That view is far from unanimous across the nation.

"Seven reasons why the Bundestag should vote 'No' today,"ran a headline in the mass-selling Bild daily before the debate, listing 'Grexit is the better solution' and 'our grandchildren will pay' among its reasons.

The Greek parliament approved the new bailout offer in the early hours of Thursday, although Prime Minister Alexis Tsipras had to rely on opposition support after some lawmakers from his left-wing Syriza party rebelled.

Mr Tsipras moved on Friday to replace his energy minister, one of the rebels, a government source said.

Some Syriza members refuse to accept the demands for yet more austerity and reform included in the deal with Greece's creditors. The Greek electorate had already rejected an earlier offer in a referendum, and the latest is even tougher.

Still, the Greek parliamentary approval opened the way for European action to stave off Grexit, at least for the time being. The European Central Bank increased emergency funding to keep the country's banks from collapse on Thursday.

European Union finance ministers also approved 7 billion euros in bridge loans to Greece, allowing it to avoid defaulting on a bond payment to the ECB next Monday and clear its arrears with the IMF.

With Ms Merkel under domestic pressure from lawmakers who have lost trust in Greece, the creditors agreed the tough deal at the weekend demanding that Athens cut pensions, raise value-added tax, and set aside 50 billion euros of state assets to sell off.

Before the Bundestag debate, Conservative lawmaker Mark Helfrich told Deutschlandfunk radio he would still vote 'No', adding: "This is about ruined trust."

Some members of the opposition Greens said they wanted Greece to stay in the euro but rejected austerity as a cure for its ills, leaving abstention as their only option. "Another bloodletting won't make Greece more healthy again," said lawmaker Katrin Goering-Eckhardt, backing IMF calls for Greece's debt burden to be eased.

That fell on deaf ears with Merkel and Schaeuble, who said European law did not permit a "haircut" writing off part of the debt.

German conservatives have accused Tsipras of blackmail for saying other weaker eurozone countries would slide into crisis if Greece were forced out of the euro. But Gregor Gysi of the Left party, Syriza's ideological counterpart in Germany, turned the tables.

"You're not being blackmailed - you're the blackmailers yourselves" said Mr Gysi. "Mr Schaeuble, I'm sorry but you're in the process of destroying the European idea."